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ANN ARBOR —University of Michigan economists are predicting an economic warm-up by spring.

Michigan has lost 150,000 jobs since mid-2000 and another 30,000 jobs will be cut before the dismal employment picture improves, but a turnaround is in the forecast.

“That Michigan residents have become increasingly jittery about the state’s economic recovery is hardly surprising,” said George Fulton, U-M economist. “We are not out of the woods quite yet, but will be soon.

“After slogging though two years of employment deadlines, the Michigan economy appears headed toward a year of transition in 2003, as near-term backsliding is followed by gradual improvement. A year from now, the outlook should be much brighter with widespread robust job gains projected for 2004.”

In their annual forecast of the Michigan economy, Fulton and colleagues Joan Crary and Saul Hymans predicted that the state will lose 35,000 jobs this year, but will regain 28,000 jobs during 2003 and then will more than triple next year’s employment gains with 88,000 jobs during 2004.

“Employment accelerates briskly during the second half of 2003 and into early 2004,” said Crary. “By the end of 2003, job creation is at a tempo comparable to the vibrant second half of the 1990s, and during 2004 the local economy reaches cruising altitude at a healthy rate of growth.”

After losing 9,000 jobs during 2002 and another projected 2,000 jobs next year, manufacturing employment is expected to regain 16,000 jobs in 2004, the forecasters said.

Although vehicle production will be lower, they added, improving export markets should help moderate job losses in non-automotive manufacturing in 2003, and a turn-around in auto production and increased demand for capital equipment will account for the increase in manufacturing jobs in 2004.

Employment growth in non-manufacturing is expected to stabilize in 2003, after losing 26,500 jobs during the current year, the forecast shows. While 30,000 jobs will be added in this sector next year, an abundance of new jobs in the service industry will account for nearly half of the 72,000 job gains in non-manufacturing during 2004.

Overall, the U-M economists said that unemployment in Michigan, which rose from 5.3 percent last year to 6.1 percent this year, the highest annual unemployment rate since 1993, will climb even higher in 2003, leaving it roughly on par with the national average.

In addition to predicting a turnaround in the state’s job growth during 2003, the forecast indicated that local consumer price inflation would remain moderate at 2.7 percent next year and 2.4 percent the year after.

Personal income is expected to increase 3.5 percent in 2003 and by a strong 5.3 percent in 2004, while growth in real disposable income, or purchasing power, will hold steady at 1.8 percent in 2003 before rising by a healthy 3.2 percent the following year.

“In all, the pessimistic view of our outlook is that 2002 turns out to be another year of new job loss for Michigan, followed by a year of only modest job growth,” said Fulton. “The optimistic view is that the job loss during 2002 is only a third of what we saw during 2001, to be followed by a significant recovery that creates jobs in 2004 at a pace as vigorous as the rate prior to the current downturn. The broader the perspective, the more encouraging the story.”

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